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With HTS FlexChip System in the Bag, Biacore Targets Protein Array Market

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Seeking to strengthen its grip on the global protein-chip market, Biacore last week acquired the FlexChip Kinetic Analysis System from HTS Biosystems for $4 million in cash.

According to Erik Walldén, CEO of Uppsala, Sweden-based Biacore, the acquisition will strengthen his firm’s command over the growing protein array market by giving it a product that it can market to academic and commercial researchers involved in upstream research for drug discovery and development.

Walldén told investors during a conference call on March 10 that the company sees the system as a complementary product to the more specialized technology it has been offering. Biacore recently released the Biacore T100, a protein analysis system, at a meeting of the Association of Biomolecular Research Facilities in Savannah, Ga., in February and began rolling out its own unnamed protein arrays to early-access customers last October.

“Biacore products were for downstream applications,” said Walldén during the call. “Now with this purchase, we can participate in upstream academic research.”

He said that combining the FlexChip System with Biacore’s existing product portfolio “will allow us to leverage our expertise in protein interaction analysis to become the leading player in the rapidly emerging protein array market … by targeting different customer groups with varying application needs.”

Biacore is itching to solidify its position in the protein array sector — a market which the company said will increase to $540 million from $120 million over the next four years. Biacore attributed its market predictions to a 2004 study by Bachman Consulting.

A study by Business Communications Co. released in 2003 predicts the market will swell to $336 million by 2007. Regardless, industry experts agree that protein arrays represent a growing market — and it’s a market where Walldén sees Biacore as the dominant player.

Enticed by such forecasts, other firms, such as CombiMatrix and Invitrogen, have also recently announced plans to enter the protein array market (see BAN 3/02/05).

Poised for Growth?

Biacore’s strategy is to become a more broadly-based company with an expanded base of reliable customers that will feed the firm’s growth, according to the CEO. Now, with the FlexChip acquisition, Biacore claims to have positioned itself as the leading player in the protein array market.

According to Terrie Pizzie, Biacore’s new chief financial officer, the company has inherited 10 FlexChip customers from HTS. He added that HTS will continue to produce the service in the short-term while Biacore relocates its manufacturing base from the US to Sweden. He said HTS will receive a single-digit royalty from all commercial sales.

Pizzie said Biacore has a sales force assembled for the new product, and has a customer base already in place.

“We already have a sales organization focused very nicely into this niche. [The] customer base is [the] same types of folks that we are already visiting,” Pizzie said during the conference call.

The FlexChip system was developed by HTS Biosystems, a Hartford, Conn.-based company whose aim has been to develop technologies that can be placed with larger distributors.

“Our goal has always been to have the technology developed, maybe initially launched, and put it in the hands of people, like Biacore, that have the established capabilities to market it,” HTS’ CEO Greg Freitag told BioArray News last week.

The system is a single-flow cell, open-array based research platform that Biacore said offers simultaneous kinetic qualitative binding of genetic data with hundreds of targets. Biacore said the product is used primarily in antibody-related research, proteomics, and disease-related protein interaction studies.

Part of the system’s portfolio is its Windows OS-compatible analysis software, as well as the Affinity protein arrays that the experiments are run on.

Sue Cresswell, a spokesperson for Biacore, explained in an e-mail that FlexChip has “the ability to screen a single sample against up to 400 different molecules to get a rapid comparison of interaction profiles.

“This makes it well suited for academia and exploratory research in drug discovery,” she said.

The FlexChip system originally was distributed by Applied Biosystems, but ABI and HTS ended their relationship in October 2004. Since then HTS had been marketing the system on its own, with modest results.

Biacore declined to comment on why ABI terminated its relationship with HTS in October, but Walldén hinted that ABI, which he said is a rival of Biacore, had failed to adequately market the technology.

“We believe we will be able to position this more accurately,” Wallden said.

According to ABI, the decision to part ways was due to the company’s ongoing business review. In a statement announcing the split, HTS’ CEO Gregory Freitag said that “although we have had a successful relationship with Applied Biosystems, we understand their future market emphasis, and agree that the FlexChip system’s success is best served through specific market focus by HTS.”

One of the substantial customers Biacore will gain through the acquisition is the United States government. Biacore inked a deal to supply the US Army Medical Research Institute of Infectious Diseases with the FlexChip system in October 2004 for use in biodefense research.

Walldén said that Biacore is already selling the FlexChip, and that it does not require any immediate changes or additions by his company. However, the CEO said Biacore will expand the platform’s applications over time. He would not disclose an exact price for the system as it is currently marketed but said it was priced at approximately $200,000.

Walldén added that Biacore will most likely use its expertise in SPR detection systems and in surface chemistry to enhance the capabilities of FlexChip and expand its applications in the future.

However, he cautioned investors that the cost of the acquisition would negate any initial commercial success for FlexChip, and that the acquisition was “expected to be neutral to the company’s earnings” in the short term.

As for HTS, Freitag told BioArray News that his company will now turn its marketing efforts to selling its other platforms, the ChemiFlex system, which is a chemiluminescent high-throughput protein microarray platform, and the PhaseFlex system, a phase-fluorescent platform geared towards target validation and library screening in cell-based assays.

— JP

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